Local leaders blast abuse of unemployment

State responds with vow to review municipal cases

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Some public safety workers are retiring at age 65 and collecting unemployment as well as their pensions. Some teachers are taking lump-sum payments in June to cover their salaries through summer vacation, collecting unemployment, and resuming their teaching careers in September. Some school-bus drivers are receiving unemployment compensation for school vacation and days off.

After 11 years working in municipal government, Lincoln’s treasurer-collector, Mary Day, said she was not surprised to see some of these alleged unemployment scenarios depicted in e-mail exchanges among officials from local towns. Now, the local officials are demanding the state do something about it.

“It’s the same stories over and over, and every time I went and fought with unemployment, they gave me the same answers back,’’ said Day, who would not specify what scenarios she has seen in Lincoln.

Day was among two dozen municipal officials who signed a letter sent to Governor Deval Patrick last week detailing what they see as holes in the state’s unemployment compensation laws relating to municipal employees. The letter’s signers included officials from Lexington, Lincoln, Medway and Wellesley.

The letter drew a quick response from the state, which this week was seeking information and announcing plans to form a special commission to reform the system.

The state Department of Unemployment Assistance released a statement by e-mail reading, in part, “We take any allegations of fraud very seriously, and are in the process of conducting an internal review of all cases about which we have specifics as well as the underlying issues raised. . . . We are fully committed to ensuring benefits only go to individuals that meet the strict eligibility requirements set forth by the state’s unemployment insurance laws.’’

“It looks like they’re on their way’’ to fixing the situation, said Day, who was pleased to receive the news.

On Monday, the agency sent a letter to officials at all 351 cities and towns in the state asking for information about any cases they felt to be questionable, with a target date of March 16. The department pledged to review all cases brought to its attention, announced a follow-up meeting with municipal leaders for March 20, and cited its plan for a blue-ribbon commission to address the situation.

The letter, authored by Lynnfield Town Administrator Bill Gustus, detailed general and specific cases in which cities and towns have had to pay unemployment compensation under circumstances that their officials found dubious. The letter termed many of the cases questionable, and referred to one that “seems to defy the laws of sanity.’’

Gustus was moved to write the letter after Lynnfield lost a decision in the case of a retired police officer who had applied for unemployment benefits despite collecting a $36,000 annual pension, and making an additional $25,000 by working on paid details.

When the officer, retired since 1999, was told he could not accept additional shifts without cutting into his pension payments, he applied for unemployment benefits. He has received $9,800 since September.

As he considered an appeal, Gustus sent an e-mail to town administrators and financial officers of other municipalities, asking whether any had dealt with a similar situation.

He was amazed by the response, he said.

“The system is no good,’’ said Gustus, who did not include the names of specific employees in the letter, but told the governor that the towns could corroborate the information. “This really is not about individual employees. It’s about a system that allows this to happen.’’

Last Thursday, the department informed Gustus that the Lynnfield case would be reconsidered.

Carl Valente, town manager in Lexington, was one of the officials who signed the letter. He said that a phrase sometimes used by those frustrated by dealing with state agencies is “death by a thousand paper cuts.’’

“To me, when I read Bill’s case, it was just another one of these things that put me over the top,’’ said Valente.

“He obviously hit a nerve with all of us that signed,’’ said Wellesley’s finance director, Sheryl Strother.

Among the cases cited in the letter sent to the governor:

■After reaching the mandatory retirement age of 65, some former police officers and firefighters collect both their pensions and unemployment benefits.

■Teachers whose contracts may not be renewed for the following academic year, which starts in the fall, are notified in the spring. Some collect a lump-sum payment in June that covers their salary through August, and then file for unemployment benefits for the summer, collecting payments until they resume their teaching positions in September.

■Retired teachers who teach in an area of “critical need’’ may return to positions at full pay, without any income limitations or pension offsets. However, once the school district fills the position, the retiree is allowed to collect unemployment benefits.

■Some school-bus drivers regularly collect unemployment benefits for vacations, holidays, and other days off. (While it was not mentioned in the letter, one municipal official said that the same loophole sometimes applies to school crossing guards. Another said it has applied to substitute teachers.)

■In one case, a municipality hired a reserve police officer to join the force full time, and paid to send him to the state’s police academy. The recruit did not receive a passing grade at the academy, was returned to the reserve ranks, and then applied for and was granted unemployment benefits.

“I think these cases clearly need to see the sunlight,’’ said Valente. “I don’t believe the Legislature would have had the intention, when they were setting up the unemployment compensation laws, of seeing these types of cases prevail. So having these in the sunlight is tremendously valuable to taxpayers.’’

The letter also cites “a quirk in unemployment law’’ in which municipalities are required to pay a portion of unemployment compensation for a call firefighter who loses his or her full-time job, even as it continues to pay the individual for work as a call firefighter.

“As a citizen, if you knew that I was retired from the town of Wellesley and collecting a pension, could you ever see a circumstance where the town of Wellesley should pay me to collect unemployment?’’ Strother asked rhetorically. “So why is that allowed? It’s obviously a loophole in the law that we disagree with.’’

Because most communities self-fund unemployment benefits, the money is taken directly from the municipal budget.

James Machado, executive director of the Massachusetts Police Association, said his organization has already contacted the state to volunteer its assistance in the examination of unemployment benefits.

“Quite frankly, we feel our reputation is on the line,’’ said Machado.

“When we worked to . . . get legislation to allow people to work in retirement, it wasn’t for them to be able to go back later and gain benefits on part-time employment,’’ said Machado, who is concerned that in the backlash, retirees will no longer be able to work police details.